Local officials decry holes in unemployment benefits laws

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Some municipal public safety workers are retiring at age 65 and collecting unemployment as well as their pensions. Some teachers are taking a lump-sum payment in June to cover their salaries through summer vacation, collecting unemployment, and resuming their teaching careers in September. Some school bus drivers receive unemployment compensation for school vacation and days off.

Those were scenarios presented in a letter to Governor Deval Patrick, authored by Lynnfield Town Administrator Bill Gustus and cosigned by town officials in 23 other municipalities last week, detailing some of the holes in the state’s unemployment compensation laws.

In the region north of Boston, the cosigners included officials from Andover, Boxford, Lowell, and Peabody.

The letter asks for the governor’s assistance in addressing what it terms the “unintended consequences leading to, in our view, the unjust enrichment of many individuals at the expense of their former and current employers’’ because of the interpretation of laws intended to protect those who have lost their jobs through no fault of their own.

It details general and specific cases in which cities and towns have had to pay unemployment compensation under circumstances that they found dubious, at best. The letter termed many of the cases as “questionable,’’ and referred to one that “seems to defy the laws of sanity.’’

The governor’s office referred questions to the Department of Unemployment Assistance, which released a statement by e-mail Wednesday, reading, in part, ”We take any allegations of fraud very seriously, and are in the process of conducting an internal review of all cases about which we have specifics as well as the underlying issues raised. We are also reaching out to the parties that signed the letter to gather more information about these serious allegations. This process will be conducted quickly and comprehensively. We will make our findings public within the limits of the law once the review is complete. We are fully committed to ensuring benefits only go to individuals that meet the strict eligibility requirements set forth by the state’s unemployment insurance laws.”

The department on Thursday informed Gustus that a case specific to Lynnfield would be reconsidered. But Gustus said that the issue goes beyond one case, as he learned from recent experience.

The origin of his letter came after the town lost a Department of Unemployment Assistance decision in the case of a retired Lynnfield police officer who had applied for unemployment benefits despite collecting a $36,000 pension and making an additional $25,000 by working police details. When the officer, retired since 1999, was told he could not accept additional shifts without cutting into his pension payments, he applied for unemployment benefits. He has received $9,800 since September 2011.

Considering a second appeal, Gustus sent an e-mail to a list of town administrators and financial officers of other municipalities, asking if any had dealt with a similar situation.

“I started getting responses that I couldn’t believe,’’ Gustus said. “What I thought was one incredible decision of a hearing officer was far more widespread than any of us realized, because no one had talked to each other about it.

“The system is no good,’’ said Gustus, who did not include the names of specific employees in the letter, but told the governor that the towns could corroborate the information. “This really is not about individual employees. It’s about a system that allows this to happen.’’

Tom Moses, finance director for Lowell, has worked previously in Cambridge, Gloucester, and Groveland.

“These happen everywhere,’’ he said. “The municipalities try to fight them, and almost always lose. In most places, the human resources person loses their motivation and stops fighting.’’

Among the cases:

■After reaching the mandatory retirement age of 65, many former police officers and firefighters collect both their pensions and unemployment benefits.

■Teachers whose contracts may not be renewed for the following academic year - which starts on Sept. 1 - are notified in the spring. Many collect a lump-sum payment in June that covers their salary through August, file for unemployment, and collect unemployment benefits until Sept. 1, when they resume teaching.

■Retired teachers who teach in an area of “critical need’’ may return to teach at full pay after they retire, without any income limitations or pension offsets. However, once the school district fills the position, the retiree is allowed to collect unemployment benefits.

■Some school bus drivers regularly collect unemployment benefits for vacations, holidays, and other days off.

■In one case, a municipality hired a reserve police officer to join the force full time, and paid to send him to the state’s police academy. The recruit did not get a passing grade at the academy, was returned to the reserve ranks, then applied for and was given unemployment benefits.

“[The situation] seems like it defeats the original purpose of unemployment [benefits],’’ said Dennis Sheehan, assistant treasurer-collector for Andover.

The letter also cites “a quirk in unemployment law,’’ in which municipalities are required to pay a portion of unemployment compensation for a call firefighter who loses his or her full-time job, even as it continues to pay the individual for their work as a call firefighter. In a similar case, the letter cited the case of a community that hired unemployed residents on a part-time basis specifically to help them survive the recession. “When their prior employers failed, the town ended up paying their unemployment as well, even as they continued to work part-time for the community,’’ the letter stated.

Because most communities self-fund unemployment, the money comes directly from the municipal budget. For example, Patricia Schaffer, director of finance for Peabody, said that unemployment costs for the current fiscal year are about $126,000. The city employs between 1,700 and 1,800 people, some of whom are seasonal employees.

“I would like to believe that people are going for unemployment because they have no other source of income and feel that they’ve earned it, but I can’t say that’s the case all the time,’’ she said.

Kathleen Benevento, director of finance for Boxford, estimated that the total cost of unemployment benefits for her town is $60,000 annually.

“We were a little a bit hesitant to go public because we didn’t want to advertise some of these loopholes for anyone that might not know about them,’’ said Schaffer, who didn’t know what percentage could be considered questionable.

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